I watched The Purge today. It is a fine film if you like bloody, violent suspense thrillers. Its main premise, however, is dreadfully flawed. According to the characters and background commentators, the 12-hour purge, during which most criminal laws are suspended*, dramatically improved U.S. economic performance through a combination of aggregate demand stimulus (increased sales of security systems and firearms) and the elimination of the poor who "leach" off society.
The stimulus angle is flawed because it commits the broken window fallacy as explained in Bastiat's essay "What is seen and what is not seen." What is seen in this case are the rising prices of shares in firearms and security system manufacturers as mentioned by a commentator during the credits. What is unseen are all the other goods that went unpurchased due to the essentially forced consumption of the sundry products of mayhem.
Elimination of the poor, while economically beneficial at first blush, would be nothing of the sort. The effect of killing a large number of poor people would be to increase unskilled wages, a boon to the remaining poor but hardly a surefire recipe for a thriving economy. (Think, for example, of the pogroms of the Soviet Union, China during the Great Leap Forward, North Korea today.)
And of course once unleashed legalized murder cannot be limited to just poor people as the movie itself makes abundantly clear. The movie claims that crime is almost eliminated by the purge, except, of course, for the purge itself. The incentive effect of shifting crime to one night is not easy to predict but it is difficult to see how it could be salutary given the salience of this state-sanctioned half day of carnage. People, in other words, would under invest in education and physical capital to the extent that they expected to be killed or maimed during the next or future purge just as surely as they under invest if they expect to be harmed on some random day.
Of course The Purge is just a movie. The producers (I mean this broadly), however, could have produced just as good a gory flick without perpetuating economic fallacies. Only one thing truly improves the economy: people working harder and/or smarter and they do so only when they have the incentive to. That means living in a society with a tolerable administration of justice, as Adam Smith put it, not one that allows everyone but federal elites to be willfully murdered.
*Certain types of weapons and murdering federal officials remain illegal during The Purge.
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